Endo Pharmaceuticals Holdings' CEO Discusses Q1 2012 Results - Earnings Call Transcript

Endo Pharmaceuticals Holdings Inc. (ENDP)

Q1 2012 Earnings Call

May 1, 2012 9:00 AM ET


Blaine Davis – Head, IR

David Holveck – President and CEO

Julie McHugh – EVP and COO

Alan Levin – EVP and CFO

Ivan Gergel – EVP, Research and Development


Marc Goodman – UBS

John Boris – Citi

Gregg Gilbert – Bank of America/Merrill Lynch

Ken Cacciatore – Cowen & Company

Corey Davis – Jefferies

Traver Davis – Piper Jaffray

Annabel Samimy – Stifel Nicolaus

Gary Nachman – Susquehanna

Michael Faerm – Credit Suisse

Greg Waterman – Goldman Sachs

David Buck – Buckingham Research

Jimmy Stuttman – JP Morgan

Michael Schmidt – Leerink

Irina Rivkind – Cantor Fitzgerald



Good day, ladies and gentlemen, and welcome to the Q1 2012 Endo Pharmaceuticals Earnings Conference Call.

(Operator Instructions)

I’d now like to turn the call over to Mr. Blaine Davis, Senior Vice President of Corporate Affairs. Please go ahead sir.

Blaine Davis

Good morning everyone. Thanks for joining us. With me on this morning’s call are Dave Holveck, President and CEO; Julie McHugh, Chief Operating Officer; Dr. Ivan Gergel, Chief Scientific Officer; and Alan Levin, Chief Financial Officer. After our prepared remarks, we’ll open the call to your questions.

I’d like to remind you that any forward-looking statements by management are covered under the Private Securities Litigation Reform Act of 1995 and subject to risks, change and uncertainties described in today’s press release and in our filings with the SEC.

In addition, during the course of this call, we may refer to non-GAAP financial measures that are not prepared in accordance with accounting principles generally accepted in the United States and that may be different from non-GAAP financial measures used by other companies. Investors are encouraged to review Endo’s current report on Form 8-K filed with the SEC for Endo’s reasons for including those non-GAAP financial measures in its earnings announcement. The reconciliation of non-GAAP financial measures to the most directly comparable GAAP financial measures is contained in our sales and earnings press release issued earlier this morning.

Now I’d like to take the opportunity to turn the call over to Dave.

David Holveck

Thank you, Blaine. Endo had a very solid first quarter with revenues of $691 million and adjusted earnings of $0.87 per share. These results were consistent with our previous financial guidance and we believe we are well positioned for a strong full year performance.

We have resolved the short-term supply constraints facing OPANA ER and Voltaren Gel. Our team has done an outstanding job of addressing these supply issues. And Julie will say more about them in a moment.

With regard to the ongoing LIDODERM litigation with Watson, we are continuing to defend our position vigorously and to work to resolve the market uncertainties with respect to the anticipated cash flows from this product. We believe our recent amendment to our Citizen’s Petition to FDA regarding the approval requirements for generic forms of LIDODERM is appropriate and well supported by current clinical practice.

As I have said before, we look to fairly value the interests of all parties achieving certainty about the future of LIDODERM and we are actively engaged to do so. Later this month at our Annual Meeting, our shareholders will vote on our proposed name change from Endo Pharmaceutical Holdings to Endo Health Solutions, a rebranding that reflects the evolution of our Company, our new approach to therapeutic areas and disease states as pathways.

And the brand equity of our four operating companies AMS, a developer of innovative medical devices; Endo Pharmaceuticals, a provider of branded pharmaceuticals; HealthTronics, a provider of medical services, practice management software, laboratory solutions and EHR technology; and Qualitest, a manufacturer of high-quality generic pharmaceuticals. Our focus this year is to complete our synthesis of these businesses and to continue to invest in their long-term growth. This investments includes new intellectual property to protect our franchise as we received recently with respect to OPANA ER and BEMA Buprenorphine and new research initiatives in pain and urology.

We expect product investments such as these to further our ability to serve the customers we have today. At the same time, we expect commercial innovation to enhance existing offerings and create new offerings that will support our goal of engaging new customers.

Our commitments to long-term growth is reflected in our 2012 guidance. We continue to expect 2012 revenues of $3.15 billion to $3.3 billion, adjusted diluted earnings per share of $5.00 to $5.20, and operating cash flows of $750 million to $850 million. That expected record cash flow from operations gives us the flexibility to invest in our business while repaying debt to achieve our target debt-to-EBITDA ratio. Debt reduction remains a top use of our operating cash flow, but it will not be the only use of our free cash.

In summary, I believe we are executing our business plan successfully, addressing our near-term challenges intelligently, and executing an effective business model for sustainable long-term growth.

Now I’d like to turn the call over to Julie to describe in more detail our first quarter performance and what lies ahead for our business. Julie?

Julie McHugh

Thank you, Dave. I’d like to start by recognizing our organization and their ability to dramatically accelerate the manufacturing for the new formulation of OPANA ER designed to be crush-resistant. We are excited to report that we are effectively manufacturing all strengths of the new formulation of OPANA ER, and also announce today that we have returned to promotional activities and have begun to encourage physicians that they can write new prescriptions of OPANA ER for their patients.

Read the rest of this transcript for free on seekingalpha.com

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